Insulin is a key hormone that controls glucose homeostasis. In liver, insulin suppresses gluconeogenesis by inhibiting the transcriptions of phosphoenolpyruvate carboxylase (PEPCK) and glucose-6-phosphatase (G6Pase) genes. In insulin resistance and type II diabetes there is an elevation of hepatic gluconeogenesis, which contributes to hyperglycemia. To search for novel genes that negatively regulate insulin signaling in controlling metabolic pathways, we screened a cDNA library derived from the white adipose tissue of ob/ob mice using a reporter system comprised of the PEPCK promoter placed upstream of the alkaline phosphatase gene. The mitogen-activated dual specificity protein kinase phosphatase 3 (MKP-3) was identified as a candidate gene that antagonized insulin suppression on PEPCK gene transcription from this screen. In this study, we showed that MKP-3 was expressed in insulin-responsive tissues and that its expression was markedly elevated in the livers of insulin-resistant obese mice. In addition, MKP-3 can activate PEPCK promoter in synergy with dexamethasone in hepatoma cells. Furthermore, ectopic expression of MKP-3 in hepatoma cells by adenoviral infection increased the expression of PEPCK and G6Pase genes and led to elevated glucose production. Taken together, our data strongly suggests that MKP-3 plays a role in regulating gluconeogenic gene expression and hepatic gluconeogenesis. Therefore, dysregulation of MKP-3 expression and/or function in liver may contribute to the pathogenesis of insulin resistance and type II diabetes.